ECN 201 BY MUMPRAYERS

MASSIVE SUCCESS IS THE GOAL

These are NOT likely questions or expected questions for ECN 201, these are just practice
questions so as to brush our knowledge about what we must have read from the textbook.
It's very imperative for everyone to have read the notes and textbooks intensively and
comprehensively and use this to practice not relying or using this for the knowledge of
answering the questions in the test and examination. Massive success is the goal. Thank you

1. The word ‘ends’ in economics refers to……a) choice b) resources c)

human wants d) opportunity cost

2. Human is faced with……….desire and ……..means a) unlimited /

limited b) limited / unlimited c) limited / limited d) unlimited /
unlimited

3. Economics is a social science because it uses….a) only deductive

method b) both deductive and inductive methods c) only inductive
method

4. PPC means…….a) Production Perfect Curve b) Product Possible

Combinations c) Production Possibility Curve d) Production
Possibility Combination

5. All points on the PPC shows that…..a) there is underemployment b)

there is full employment c) there is unattainable output level
6. Marginal rate of transformation is also referred to as……a) demand
curve b) utility c) the slope of the PPC d) equilibrium

7. The following are the economics unit except a) household b) firm

c) entrepreneur d) economist

8. The economic unit is…..a) irrational b) rational c) stingy d)

unsatisfied

9. ………..deals with the smaller aggregate of the economy like the

behavior of individual consumer, firms or group of firms a)
microeconomics b) macroeconomics c) minuteeconomics

10. The following are markets classified based on goods and

services except ….a) product market b) monopoly market c) money
market d) land market e) labour market

11. ……is an arrangement that allows economic unit to interact in

making choice a) international trade b) market c) trading d) barter
system
12. Gasoline rationing (allocating to each individual a maximum
amount of gasoline that can be purchased each year) is poor social
policy because it interferes with the workings of the competitive
marketing system. This statement is…….a) inductive reasoning b)
normative statement c) positive statement d) deductive reasoning

13. In factor market, households are……while business firms ar

e…….a) buyers / sellers b) sellers / buyers c) insignificant /
significant

14. ……..is a market that deals with short term loans a) money
bank b) capital market c) central bank d) money market e) capital
bank

15. The following are markets classified based on the relative

influence of the buyers and sellers on the market price except a)
labour market b) perfectly competitive market c) monopolistic
competition d) duopoly e) monopsony

16. In a perfect competitive market, Average revenue (AR) i

s………..a) greater than average cost (AC) b) greater than marginal
revenue (MR) c) equal to marginal revenue (MR) d) equal to average
cost (AC)
17. Gasoline rationing is a policy under which more people are
made worse off than are made better off. This statement is…….a)
inductive reasoning b) normative statement c) positive statement d)
deductive reasoning

18. …….is a market structure in which there is a large number of

buyers and sellers but can’t influence price a) monopolistic
competition b) perfect competition c) monopoly d) duopoly

19. ………..is affected by other factors of demand except from price

of the commodity concerned a) change in demand b) change in
quantity demanded c) movement along the same demand curve d)
change in supply

20. ……..is a market with one seller / firm but many buyers a)
monopoly b) monopsony c) duopoly d) oligopoly

21. The demand curve facing firms in perfect competition is……….a)

downward sloping b) horizontal c) upward sloping

22. The profit maximization level for a firm is when…….a) MR> MC

b) AR = MC c) MR = AC d) MC = MR

23. …….is a market with few sellers a) duopoly b) monopsony c)

oligopoly
24. A firm will be advised to shut down if it can’t cover its…….a)
average fixed cost b) average variable cost c) total cost d) loss

25. All are characteristics of a perfect competitive firm except a)

free entry, free exit b) homogeneous goods c) barriers to entry d)
perfect knowledge of the goods

26. ………is a market with large numbers of sellers and buyers but
with differentiated goods a) monopolistic competition b) perfect
competition c) monopoly d) duopoly

27. ……..is a market with just two firms a) duopoly b) monopsony

c) oligopoly

28. ………is a market in which the firm is the industry a) duopoly b)

monopsony c) perfect competition d) monopoly

29. …….are man-made resources used for production a) money b)

capital c) machinery d) technology

30. The bedrock of all economic problems is…….a) unlimited want

b) unlimited resources c) scarcity of resources
31. ……..are free gifts of nature a) labour b) land c) capital d)
resources

32. ……has to do with the mental and physical efforts or skills

utilized into the production process a) labour b) entrepreneur c)
capital d) manpower

33. ……….is a choice made for the most desirable alternative among
the available or affordable ones a) opportunity cost b) effective
choice c) rational choice

34. The sellers are price takers in ……….market a) monopoly b)

perfect competitive c) monopolistic competition d) duopoly

35. The following are the basic economic problems except a) how
to produce b) what to produce c) where to produce d) for whom to
produce e) efficient allocation of resources

36. ………shows the various combinations of two goods that can be

produced in a country when all available resources are fully and
efficiently utilized a) allocation of resources b) economic system c)
production possibility curve

37. Palm oil and palm kernel are in….a) joint demand b)competitive
demand c) competitive supply d) joint supply
38. Any point inside the PPC means that……a) resources are not
fully utilized b) resources are fully utilized c) technology is fixed d)
unattainable

39. …….is a market with one buyer only a) monopoly b) duopoly c)

monopsony d) oligopoly

40. ……..deals with objective facts and the way things will be if
certain condition exist a) positive economics b) normative
economics c) deductive economics d) normal economics

Suppose the demand curve for a product is given by Q = 300 – 2P +4i,

where I is average income. The supply curve is Q = 3P – 50.

41. If i = 25, what is the market – clearing price and quantity for the
product a) 70 and 160 respectively b) 220 and 90 respectively
c) 90 and 220 respectively d) 160 and 70 respectively

42. If the price of a product increases from $80 to $100 while

quantity demanded decrease from 2000 to 1800. Calculate the price
elasticity of demand a) 0.6 b) 0.5 c) 0.4 d) 0.7
43. Any point outside the PPC is……a) the optimal level b)
underutilized c) fully utilized d) unattained output level

44. ……….deals with hypothesis test, estimation, point and interval

etc. a) descriptive statistical tool b) inferential statistical tool c)
statistical economic tool

45. One of the following will lead to the attainment of points above
the production possibility curve (PPC) a) efficient use of power b)
improvement in level of technology c) effective government policy

46. ………make use of basic tools such as model, logic and

mathematics a) deductive method b) inductive method c) positive
economics d) normative economics

47. ‘Nigerian youths are lazy’. Westminster is a Nigerian, so

therefore he is a lazy youth. This reasoning is called….. a) deductive
method b) inductive method c) positive economics d) normative
economics

48. …….refers to the quantity of a commodity that consumers are

willing or ready to buy at a given point in time a) need b) want c)
effective need d) demand
49. The process by which forces of demand and supply interact to
fix the price of a commodity is referred to as……a) market price b)
maximum price c) price mechanism d) regulated price

50. …….is concerned with subjective value judgment, opinion or

what ought to be etc a) deductive method b) inductive method c)
positive economics d) normative economics

51. A want or wish backed up with the ability to pay is called…..a)

effective demand b) demand c) ineffective demand d) need

52. The quantity demanded is……….related to price a) inversely b)

direct c) proportional d) downward

53. …..... involves prediction or generalization based on past events

a) deductive method b) inductive method c) positive economics d)
normative economics

54. …….is a table showing the list of various prices of a commodity

and the corresponding quantities that would bepurchased at a
particular time period a) demand curve b) demand table c) demand
schedule
55. A normal demand curve slopes…………..a) downward from right
to the left b) upward from the left to the right c) downward from left
to the right d) horizontal

56. A typical demand curve has ……slope a) positive b) negative

c) direct d) upward

57. For a necessity good, a change in income leads to……change in

demand a) increase b) decrease c) constant d) no

58. Qd = 140 – 0.02P If P is #1,000, what is Qd a) 140 b) 110

c) 120

59. For a normal good, demand…….as income increases a)

increase b) decrease c) constant

60. One of the following is a reason why demand curve slopes

downward from the left to the right is…..a) unlimited resources b)
marginal utility of the good c) limited wants d) price of the goods
 ECN 201 BY MUMPRAYERS

MASSIVE SUCCESS IS THE GOAL

1. C 2. A 3. B 4. C 5. B 6. C 7. D 8. B 9. A 10. B 11. B 12. C

13. B 14. A 15. A 16. C 17. B 18. B 19. A 20. A 21. B 22. D 23. C

24. B 25. C 26. A 27. A 28. D 29. B 30. C 31. B 32. A 33. C 34. B

35. C 36. C 37. D 38. A 39. C 40. A 41. C 42. C 43. D 44. B 45. B

46. A 47. A 48. D 49. C 50. D 51. A 52. A 53. B 54. C 55. C 56. B

57. D 58. C 59. A 60. B

 ECN 201 BY MUMPRAYERS
MASSIVE SUCCESS IS THE GOAL

61. Abnormal demand curve has a …….slope a) positive b)

negative c) upward d) downward

62. ……are goods which demand decreases as the price decreases

a) inferior goods b) giffen goods c) abnormal good

63. …….is when two or more goods are demanded to satisfy just a
want a) complementary demand b) competitive demand c)
composite demand

64. An increase in price of one leads to an increase in demand of

another, the kind of goods is a……a) derived goods b) substitute
goods c) complementary goods
65. The demand for labour is a ………demand a) derived b)
competitive c) complementary

66. A goods demanded for several purposes is known as ……a)

complementary demand b) competitive demand c) composite
demand d) derived demand

67. An increase in price of good x leads to decrease in demand of

good y, good x and y are….a) complementary b) substitute c) derived

68. Movement along the same demand curve is caused by…..a)

price of the commodity concerned b) price of relative commodities
c) income of the consumers d) population

69. …….goods are goods which demand decreases as income

decreases a) neutral goods b) normal goods c) inferior goods d)
giffen goods

70. …….is the relationship between the demand for commodity x

and price of commodity y a) income demand b) cross demand c)
substitute demand
71. If the quantity demanded of x will not be affected by changes
in the price of y, then x and y are……….a) natural goods b) normal
goods c) neutral goods d) not related goods

72. …….is how much a firm is willing to offer for sale a) demand b)
supply c) sales

73. There is a …….relationship between the demand of a commodity

and its price a) positive b) negative c) constant

74. ………measures the degree of extent at which consumers react

to changes in price of a commodity a) elasticity of demand b)
income elasticity of demand c) price elasticity of demand d) cross
elasticity of demand

75. The following will cause abnormal demand except a) giffen

goods b) goods of ostentations c) speculation in rise in price d)
income of the consumer

76. A given change in price leads to a greater change in quantity

demanded, demand is said to be……a) perfectly elastic demand b)
zero elastic demand c) relatively elastic demand d) inelastic demand
77. When the demand curve is horizontal, demand is said to be ….a)
perfectly elastic demand b) elastic demand c) perfectly inelastic
demand d) moderately inelastic demand

78. Westminster is a doctor. Westminster is cute, therefore all

doctors are cute. This is……….. a) deductive method b) inductive
method c) positive economics d) normative economics

79. If the demand curve have a vertical slope, demand is said to b

e…..a) perfectly elastic b) perfectly inelastic c) fairly elastic d) fairly
inelastic

80. If the value of the cross elasticity of demand is equal 0, it

indicates that good X and Y are……a) complement b) not related c)
necessity d) substitute

81. If the elasticity of demand is greater than negative one but less
than zero, the price elasticity is……a) perfectly elastic b) perfectly
inelastic c) fairly elastic d) fairly inelastic
 If Qd= 100 – 5p + 3i, where i is average income of consumer.
Qs= -40 + 5p. if i = #50.

82. Find the equilibrium price and quantity a) #29 and 150 units
respectively b) #105 and 29 units respectively c) #29 and 105 units
respectively d) #150 and 185 units respectively

83. What will happen if the government fix a maximum price of #20
a) excess demand of 110 units b) excess supply of 110 units c)
excess demand of 90 units d) excess supply of 60 units

84. If i decrease from #50 to #30, determine the new equilibrium

price and quantity a) #75 and 23 units respectively b) #23 and 75
units respectively c) #21 and 65 units respectively

85. If income elasticity is >0<1, this indicates……..a) luxury goods b)

normal goods c) inferior goods d) necessity goods

86. If the value of the cross elasticity of demand is positive, then

good X and Y are…..a) substitutes b) complement c) elastic d)
normal

87. The following are factors affecting elasticity of demand except

a) availability of close substitutes b) nature of the commodity c)
time d) level of firms capacity
88. An equilibrium that constitute desirable state of affairs such as
profit maximization ,cost minimization and welfare minimization is
known as…..a) economic equilibrium b) goal equilibrium c) normal
equilibrium

89. Market equilibrium, national income equilibrium, exchange rate

equilibrium etc are examples of…..a) economic equilibrium b) goal
equilibrium c) normal equilibrium d) non goal equilibrium

90. ……is when the market demand curve intercept the market
supply curve a) market equilibrium b) equilibrium point c)
equilibrium demand d) equilibrium curve

If Qd = 50 + 3p and Qs = 100 – 2p.

91. The equilibrium quantity is….a) 100 units b) 80 units c) 8 units

d) 10 units

92. The equilibrium price is a) 80 b) 10 c) 100

93. Any price above the equilibrium price will lead to…..a) excess
demand b) excess supply c) shortage demand
 PRICE (#) QUANTITY QUANTITY
DEMANDED SUPPLIED

1000 120 0

2000 100 10

3000 80 20

4000 60 30

5000 40 40

6000 20 50

7000 0 60

94. The equilibrium price is……a) #40 b) #5000 c) #4000 d) #30

95. At price #2000, excess demand is…..a) 100 units b) 10 units c)

90 units d) 110 units

96. The equilibrium quantity is….a) 40 units b) 4000 units c) 5000

units d) 60 units

97. Cobweb model assumes that demand depends on …….while

supply depends on……a) previous price / current price b) current
quantity / previous quantity c) current price / previous price d)
previous quantity / current quantity
98. An equilibrium is stable if…..a) the demand is equal to supply b)
there is price mechanism c) there is tendency to restore back itself
after any disturbance from external factors d) the equilibrium can
stay for long

99. Equilibrium will never occur in a market where …….a) supply is

equal to demand b) supply exceed demand at zero price c) demand
exceed supply at a price d) there is no price mechanism

100. Identification of a stable and unstable equilibrium can done vi

a…..a) price mechanism b) uniqueness of the equilibrium c) cobweb
model d) price model e) demand model

101. The process of fixing maximum price is known as……a) price

ceiling b) price floor c) highest price d) above equilibrium

102. Minimum price will lead to……..while maximum price will lead t
o……a) excess demand / excess supply b) excess supply / excess
demand c) equilibrium / disequilibrium

103. Minimum price are usually set for……a) luxury goods b)

agricultural commodities c) essential goods
104. A shift of the demand curve to the right while supply remains
constant will lead to…..a) increase in both equilibrium price and
quantity b) increase in equilibrium price and decrease in equilibrium
quantity c) decrease in equilibrium price and increase in equilibrium
quantity d) decrease in both equilibrium price and quantity d)
constant in both equilibrium price and quantity

105. If a 3-percent increase in the price of corn flakes causes a

6-percent decline in the quantity demanded, what is the elasticity of
demand a) inelastic demand b) elastic demand c) unitary demand
d) perfectly elastic demand

106. A shift in supply means…..a) movement along the same supply

curve b) change in supply as a result of increase or decrease in price
c) change in supply as a result of changes in other factors affecting
supply except price

107. ……..is refers to a collection of buyers and sellers who interact,

and to the possibility for sales and purchases that result from that
interaction a) marketing b) market c) sales point d) e-trading

108. The federal government has closed the border, the prices of
rice will surely rise. This statement is…..a) inductive reasoning b)
deductive reasoning c) normative reasoning d) positive economics
109. If the demand curve remains unchanged, a rightward shift of
the supply curve will lead to…..a) increase in both equilibrium price
and quantity b) increase in equilibrium price and decrease in
equilibrium quantity c) decrease in equilibrium price and increase in
equilibrium quantity d) decrease in both equilibrium price and
quantity d) constant in both equilibrium price and quantity

110. ………is a legal price set above the equilibrium market price a)
minimum price b) market clearing price c) maximum price

111. The effect of decrease in demand or leftward shift in the

demand on market equilibrium when demand and supply is fairly
elastic is that there will be……a) increase in both equilibrium price and
quantity b) increase in equilibrium price and decrease in equilibrium
quantity c) decrease in equilibrium price and increase in equilibrium
quantity d) decrease in both equilibrium price and quantity d)
constant in both equilibrium price and quantity

112. Legacy concept makes perfect graphic designs. Legacy

concept owner is a student, therefore all students makes perfect
graphic designs. This is refers to as…..a) inductive reasoning b)
deductive reasoning c) normative reasoning d) positive economics
113. When income is #10, the price of commodity x is #1 and
commodity y is #2. Therefore, you are to purchase to 10 of good x or
5 of good y, this is …….a) inductive reasoning b) deductive reasoning
c) normative reasoning d) positive economics

114. …….moves from generalities to specific conclusions while

…….moves from specific to generalities conclusions a) deductive
reasoning / inductive reasoning b) inductive reasoning / deductive
reasoning c) positive economics / normative economics

115. ‘Money supply should be reduced to lower inflation rate in the

economy’. This is…..a) inductive reasoning b) deductive reasoning c)
normative economics d) positive economics

116. The demand for a commodity not directly for immediate

consumption or its sake but for the production of another commodity
is…..a) competitive demand b) derived demand c) composite
demand d) joint demand

117. Two goods, x and y, are said to be complementary when a) a

fall in the price of x raises demand for y b) a fall in the price of x
causes a fall in demand of y c) a fall in the price of x does not affect
the demand for y d) the two goods are competitive
118. Demand for factors of production is…….a) composite demand
b) joint demand c) derived demand d) elasticity of demand

119. If a 10% rise in price causes a 5% decrease in the quantity

demanded of a commodity, the elasticity of demand is…..a) elastic b)
inelastic c) unitary d) zero elastic

120. A price floor is usually fixed….a) at the equilibrium and causes

no shortage b) above the equilibrium and causes surplus c) below
the equilibrium and causes surplus d) above the equilibrium and
causes surplus
 ECN 201 BY MUMPRAYERS
MASSIVE SUCCESS IS THE GOAL

61. A 62. B 63. A 64. B 65. A 66. C 67. A 68. A 69. C 70. B

71. D 72. B 73. B 74. C 75. D 76. C 77. A 78. B 79. B 80. B

81. C 82. C 83. C 84. B 85. 86. A 87. D 88. B 89. D 90. A

91. B 92. B 93. B 94. B 95. C 96. A 97. C 98. C 99. B 1OO. C

101. A 102. B 103. B 104. A 105. B 106. C 107. B 108. D 109. C

110. A 111. D 112. A 113. B 114. A 115. C 116. B 117. A

118. C 119. B 120. D